Should You Buy A Home For Your Elderly Parent? Three Options To Consider
As your parent or grandparent gets older, you are likely interested in ensuring that they have a good home where they can enjoy their retirement and that you can care for their safety.
Does this mean you should buy a house for them if you can afford it? Perhaps. To help you and your parent decide on the best course of action, here are 3 choices for providing a home for your older family members.
Buy With Them
Buying a property with your parents allows both of you access to homes you may not be able to qualify for on your own. There are different ways to do this, such as by paying part of the costs and reducing what your parents have to pay. This works well if their retirement savings is limited.
You could also choose to serve as a co-signer for elderly family members. This could result in better mortgage interest rates and easier qualifications. But you don't have to front any money or make payments. The downside, of course, is that you would have to assume payments should they become unable to. So make sure you can afford to do so.
Buy for Them
Buying a house outright can make the impact on your taxes less. You can generally deduct the mortgage interest and taxes on the second home, treating it essentially as a vacation home. And your aging parents will have a safe place to live without having to worry about house bills.
The cons of this arrangement is that you tie up a lot of your assets in a property that you can't easily sell. If this purchase takes a big chunk of your retirement savings, it may set you back on your own retirement path.
Rent to Them
The alternative to simply giving your parents a home outright is to charge them rent. A rental agreement gives the older family member a feeling of independence and self-sufficiency and reimburses you for some (or all) of the expenses of buying the home.
If you choose to purchase a property to rent to family members, look for a home for sale that will serve as a good rental unit in the future. You will have to declare the rental income on your taxes, but you can also deduct the related expenses. The net effect might even reduce your taxable income.
Which of these options is right for your family? It depends on the financial and emotional needs of both you and your aging parents. But any of these housing arrangements can provide peace of mind and financial benefits for everyone.
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